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The research reports excerpted here were issued recently by investment and research firms. Many may be obtained through Thomson Reuters at www.thomson.com/financial or 800-638-8241. Some are available in the company-research area of WSJ.com, or through Factiva.com. Some of the reports' issuers have provided, or hope to provide, investment-banking or other services to the companies being analyzed.

Fossilfosl -0.3466204506065858%Fossil Group Inc.U.S.: NasdaqUSD34.5
-0.12-0.3466204506065858%
/Date(1481301823827-0600)/
Volume (Delayed 15m)
:
97398
P/E Ratio
16.766990291262136Market Cap
1666364388.51456
Dividend Yield
N/ARev. per Employee
203689More quote details and news »foslinYour ValueYour ChangeShort position
• FOSL-Nasdaq Buy • Price $84.24 on Nov. 6 by Caris & Co. Based on what we see as an unwarranted selloff in the shares after a strong third quarter with guidance maintained for fourth quarter, we are raising our rating from Above Average to Buy. We are also raising our price target to $105, 17 times our new 2013 estimate of $6.22, a touch above its two-year average of 16.5 times, well below its two- and five-year highs of 23 times, and in line with its peer group. This is an attractive value for a globally recognized portfolio of brands with double-digit top- and bottom-line growth. We see an opportunity to own one of the best-managed companies in its industry, one with significant global growth opportunities in watches—a category Fossil dominates—and other fashion accessories, particularly in the "white space" of affordable price points, as luxury brands have risen dramatically in price. Next week's investor day on Nov. 13 is likely to be a nice catalyst for the shares, providing further clarity on global growth and margin opportunity.

Cumminscmi -0.6143413548476839%Cummins Inc.U.S.: NYSEUSD142.8967
-0.8833-0.6143413548476839%
/Date(1481301817567-0600)/
Volume (Delayed 15m)
:
183205
P/E Ratio
20.678726483357455Market Cap
24194578417.0227
Dividend Yield
2.8693400517880887% Rev. per Employee
322265More quote details and news »cmiinYour ValueYour ChangeShort position
• CMI-NYSE Outperform • Price $101.91 on Nov. 6 by Credit Suisse We had the opportunity to spend the day with the executive management team of Cummins....Take-aways are as follows: The U.S. truck market remains unpredictable. We could see another year below replacement, which would imply 240,000 units (flat with 2012). The more positive scenario implies 320,000 units as we exit the back half of 2013. The Chinese truck market also appears to have bottomed, although we could stay here until the economy improves. Still, inventory levels are healthy at 60 days. Chinese construction remains ugly, with nine months of excess inventory for excavators versus two to three months normally. Mining also could deteriorate further (although not fall off a cliff), whereas oil and gas appears to have bottomed. Finally, Cummins appears cautiously optimistic on Brazil truck and construction over the next 12 to 18 months.

While Cummins hasn't given much color on 2013, we expect a prudently conservative guide reflecting the uncertain macro and two quarters in a row of negative preannouncements. Under this assumption, we see Cummins in a low-growth economic environment with flattish revenue, although it still looks to improve gross margin and reduce selling, administrative, and research-and-development costs based on initiatives announced to date.

We are reducing our 2013 earnings-per-share estimate to $8.65 to reflect a more cautious macro outlook. Still, assuming better macro and Cummins' ability to outgrow its markets based on new customer and product wins, we see earnings accelerating. Our 2014 EPS is now $10.40, and we establish our 2015 EPS at $12.05. Our 12-month price target is $110.

Southernso 0.07593334739506433%Southern Co.U.S.: NYSEUSD47.446
0.0360.07593334739506433%
/Date(1481301809081-0600)/
Volume (Delayed 15m)
:
583587
P/E Ratio
17.979211714274875Market Cap
46499631780.2737
Dividend Yield
4.726236944825404% Rev. per Employee
685092More quote details and news »soinYour ValueYour ChangeShort position
• SO-NYSE Neutral • Price $44.14 on Nov. 7 by Hilliard Lyons Southern reported third-quarter operating earnings of $1.11 per share versus $1.07 per share in the third quarter of 2011. Earnings were slightly below the consensus estimate of $1.13 per share. Earnings were helped by both higher rates and lower operations and maintenance expense. This was partially offset by milder-than-normal weather as compared with warmer than normal a year earlier. The weather adversely affected earnings by seven cents per share. In addition, operating revenue dropped 7%, to $5.05 billion, down from $5.43 billion a year earlier. The company noted that the economy slowed in its service territory after a positive first six months of the year.

Total weather-adjusted sales fell by 1.4% in the third quarter. Residential sales declined by 2.1%, while commercial sales declined slightly by 0.1%. However, industrial sales fell by 1.9% during the period. This is significant, in our view, as it marked the first time in several years in which industrial sales declined meaningfully in a quarter. Management cited uncertainty surrounding the elections, the fiscal cliff, and the slowing world economy as possible reasons for the reduced growth in its service area. Southern expects total 2012 sales growth of 0.5% to 1.0%, versus its previous estimate of 1.3%. In response, we are trimming our 2012 and 2013 EPS by five cents and seven cents, to $2.60 and $2.75.

Our rating on Southern remains Neutral. We lowered our opinion earlier this year due to valuation. However, we still regard Southern as one of the country's premier electric utilities. The company has delivered consistent earnings and dividend growth over the years, and we expect that trend to continue.

TRW Automotive Holdings
• TRW-NYSE Overweight • Price 449.28 on Nov. 6 by Morgan Stanley TRW has been our favorite catalyst-driven story this year. The stock has done well recently after a pulled-forward buyback announcement, but remains one of the cheapest stocks in the group, despite management signaling confidence in the outlook and more catalysts to come.

TRW was one of the few clean good beats of the third quarter. While we were comfortably above consensus going in, TRW squeaked in ahead of even our expectations, driven by strong margin traction. While management's muted guidance for the fourth quarter was not a surprise, we have heard much worse from other automotive suppliers this season.

TRW remains a secular story with improving fundamentals, yet one of the cheapest stocks in the group at 7.5 times estimated 2013 P/E. We continue to like TRW, as it is one of the few stocks with explicit positive catalysts in a group where most names are stuck in a holding pattern on macro. While we were surprised by the timing of the share-buyback announcement in early October (which was supposed to be the "last" catalyst due in mid-2013), we believe there is plenty to come, and that signals management's confidence.

Discovery Communications
• DISCA-Nasdaq Equal Weight • Price $57.46 on Nov. 6 by Barclays The nonfiction cable show producer's third-quarter revenue and adjusted operating income before depreciation and amortization were generally in line, but below-the-line items led to EPS coming in five cents below expectations. Management lowered its full-year guidance to incorporate the sale of its Creative Sound Services business, FX head winds, higher stock-based comparison, and a higher tax rate. We believe that these adjustments are noncore in nature and that long-term organic trends remain intact, though not accelerating.

While we are raising our price target to $57, which is based on 17.2-times our 2013 EPS of $3.31 (our prior price target of $52 was based on 15.7-times our 2013 EPS estimate of $3.32), we prefer a better entry point and reiterate our Equal Weight rating.

We believe Bottomline continues to demonstrate good execution in its core cash-management and legal-exchange businesses. Meanwhile, the firm could capture operating leverage such that margins in earnings before interest, taxes, depreciation, and amortization could near 25% in fiscal 2015, which would almost certainly drive the stock higher. Nearer term, all signs point to continued in-line or slightly better-than-expected quarterly execution. We reiterate our Buy rating.

In the third quarter, Bottomline reported revenue and non-GAAP EPS of $61.7 million and 30 cents, which were respectively $1.7 million and eight cents ahead of our estimates. Reported revenue growth was 18%; organic growth was 10%. Quarterly orders were $62.7 million, which was up 30% Y/Y. The firm generated $8.3M in quarterly free cash flow.

Outlook: 2013 guided $4 million and seven cents ahead of estimates. EPAY provided an updated outlook that called for 2013 revenue and EPS of $254 million and $1.02. Management reiterated a goal of 25% operating margins in 2015, which, if achieved, will prove our forward estimates very conservative.

Cinemark HoldingsCNK -0.885179564997471%Cinemark Holdings Inc.U.S.: NYSEUSD39.19
-0.35-0.885179564997471%
/Date(1481301815105-0600)/
Volume (Delayed 15m)
:
62623
P/E Ratio
19.386138613861387Market Cap
4594468949.15588
Dividend Yield
2.7579162410623086% Rev. per Employee
151558More quote details and news »CNKinYour ValueYour ChangeShort position
• CNK-NYSE Outperform • Price $26.22 on Nov. 8 by Barrington Research Despite some delays internationally over the past several quarters, management continues to target aggressive screen-count additions by year end. Guidance includes the gross addition of about 28 screens domestically by year end, though a similar number of closures are expected to offset most of the change. Internationally, management believes it will achieve a net addition of about 40 screens in the fourth quarter. As a result of construction delays earlier in the year, many new-screen builds internationally have been delayed into the 2013 time frame, which may imply upward of 100 screen additions in that year.

Better-than-expected diluted EPS of 41 cents for the third quarter came in above our estimate of 34 cents, despite the presence of significant head winds in the period, including expected softness in domestic box-office results. Gains were primarily driven by underlying strength in international attendance trends, although the positive variance was also partially driven by modestly better-than-expected film-rental gross margin.

We are moving our full-year 2012 EPS estimate by a nickel to $1.55. Favorably, the fourth quarter is off to a strong start, currently tracking 20% ahead of the year-ago period. We are maintaining our $1.75 and $2.05 estimates for 2013 and 2014.

We reaffirm our Outperform rating. Our $31 price target is based on an enterprise-value/Ebitda multiple of about 7.5 times applied to our 2012 estimates. Applying the same multiple to our 2013 estimate, we set a price target of $34. We feel Cinemark deserves a premium valuation relative to its peer group due to its solid performance domestically and international operations that continue to outperform. Also, the 84-cent dividend amounts to a generous 3.4% yield.